29 Sep Fixed Income Perspectives – The QE Shoe Drops: Now What?
The Federal Reserve will begin reducing its holdings of Treasury and agency mortgage securities in October. Reduction will start at $10 billion per month, gradually rising to a maximum of $30 billion. The Fed is keeping the door open for a December interest rate hike.
Voya Investment Management – Fixed Income Perspectives – September 2017
As expected, the Federal Reserve Open Market Committee officially announced its plan for the pace, scope and timing of the Fed’s balance sheet reduction in its September meeting. Set to begin in October, the Fed maintained its transparency in announcing the details of the reduction of Treasury and agency mortgage securities. While capped on a monthly basis, the balance sheet reduction cap amount is set to increase at a gradual pace. Fed Chair Janet Yellen also kept the door open for a December interest rate hike, which we still expect. She stressed that any potential negative effects on third-quarter economic data as a result of Hurricanes Harvey and Irma likely will be minimal.